Dependency Exemption

[cc423]

What is the name of your state? Ohio
I've found myself with a bit of an issue for 2004 taxes. I am the Custodial Parent, my ex only has visitation.
My divorce decree was poorly written in 2001 when it came to the tax issues.
It states that my ex can take our youngest child and I would take the older child, when/if he became current in child support. It was to remain that way until our oldest reached 18, then we would alternate yearly after that with me taking even tax years, him taking odd tax years. However, they left off the wording regarding when our oldest turned 18, and of course he's going to be a jerk.

Since he had been seriously delinquent in child support it hadn't been an issue until this year when the he finally caught up at the end of September.
He's informed me that he's taking the deduction for our youngest even though he only has an income of $7200.00. Since the child lived with me the entire year he can't claim EIC.
At our last child support review he showed an income of $7200.00 or less for every year since 2001 and did not have his taxes from 01-03 filed yet. Now he says they have been filed, and he owes some money from 01, and thats why he needs the deduction(?). I've tried to explain to him that at that low of income, taking the deduction will not change his refund. Either way he'll get all his tax $$ back.

He also cashed out a small 401k that was awarded to me in the divorce.
I alone am funding our older childs college education, and am taking the deductions for that and I have also remarried. Without the deduction of my younger child, it will also hurt on the FAFSA application.

I'm finding the current articles regarding the Use/Non-Use of Dependency Exemption rather confusing. It seems like IRS flat out gives the exemption to the Custodial Parent regardless of divorce decree (i have not signed any 8332) but on the other hand am I going to get smacked from the courts if I take the deduction? What could they do since he would have had no benefit anyway? During divorce proceedings, my ex liquidated 2 cars, a boat and most of a business while there was an order in place not to do so and the courts didn't do anything.

I realize a trip back to court to straighten this out is going to have to happen, but is the judge likely to change the original order and do I have ANY chance of getting the deduction for 2004? Should I file or wait? So far this has been the divorce from hell.
Thank you & sorry for the lengthy post.

 

[tmsinWA]

I am in no way a tax expert, but have done extensive reading on the subject of dependent exemptions and divorce. I will try to answer your question but I recommend that you consult a tax attorney regarding your rights!

I am ultimately in the same situation as you (though probably not to the same degree). If the divorce decree is "conditional" with regards to the tax exemption (i.e conditional based on support obligations), the NCP (non-custodial parent) CANNOT claim the children unless a Form 8332 (or another statement that conforms to the information in the form) is signed by the CP (custodial parent). The only way another form can conform to the contents of Form 8332 is if it provides the (1) Name of the Children the exemption is for, (2) the year or years that the exemption is valid (3) CP signature (this is important) and SSN (4) NCP signature (I don't think their SSN has to be on the form -- not positive though, and (5) the date the form was signed. Now this is Federal Tax Code!

In my case, my ex-husband was awarded the exemptions for both our girls so long as he was current in his support. (i.e. "conditional") After the divorce, we both agreed that he would claim one and I would claim the other - so long as he was current in his support. (i.e. "conditional as well"). The second agreement was NOT filed in court. Either way, both statements are conditional therefore he needs to attach the Form 8332 to his return EVERY year (regardless of what the decree states).

Now, since the tax exemption increased a few years ago, my ex and his new wife decided that they were going to start claiming both daughters on their taxes. (though from the years 1997 through 2002 he abided by our secondary agreement - not court order agreement). I offered to sign a Form 8332 for year 2004 for our oldest only. That offer was refused.

Technical (according to Federal Tax Code) the CP can claim the exemption unless they signed a Form 8332 (regardless of the state court divorce order). Of course, if the state court order is "unconditional", the above statement is void! In your case, it sounds as if your divorce order is "conditional", therefore you are within your rights to claim the exemption if you have not signed a Form 8332.

Warning though, if you file and your ex also files that will flag the IRS. More than likely both of you will be audited. Though since you are the CP, you will probably win the audit with flying colors. (Don't worry, I was audited in 1998 regarding the same thing....I won hands down). Even after the audit, your ex can opt to go back to family court and you will probably be facing a VERY angry family court judge since you defied the court order. The family court can modify the decree to substantially conform to the Federal Tax Code and/or order you both to switch regardless. You also may have to repay your ex the amount that his refund would have been (that is if he is eligible to a refund) and/or support may be modified accordingly.

That is your decision. I have chosen to continue to claim my youngest daughter and not my oldest (as per our agreement) and am willing to accept the consequences if my ex decides to go back to family court. I'm currently living in Washington state, he's a resident of Tennessee (I hardly doubt that he will be spending that kind of money!). In any case, I have taken that road....

You need to make that decision according to your situation and then prepare for what may happen! (i.e set a $$ reserve aside in case it doesn't go your way!)

 

[cc423]

Thanks for your reply. I've been thinking along those lines as well.

My ex has no money. He only claims to have made $7500.00 last year so really he doesn't even have to file a return according to the new irs guidlines! He's just choosing to be a jerk. He would have to borrow the $$ to take me back to court.

I also came across a copy of my divorce hearing transcript. In that transcript, the Magistrate gave me the deduction for both of the children and said that if my ex ever became current in support, he could petition the court to review the order. However, she would base her decision on who would benifit most from the tax deduction and what is in the best interest of the children.

If that were to be the case, I would have the deduction no problem. But is it worth the risk? Waiting for the attorney to call me back now and see what they say...will be an interesting call.

Thanks for your info!

 

[tmsinWA]

Thanks for your reply. I've been thinking along those lines as well.

My ex has no money. He only claims to have made $7500.00 last year so really he doesn't even have to file a return according to the new irs guidlines! He's just choosing to be a jerk. He would have to borrow the $$ to take me back to court.

I also came across a copy of my divorce hearing transcript. In that transcript, the Magistrate gave me the deduction for both of the children and said that if my ex ever became current in support, he could petition the court to review the order. However, she would base her decision on who would benifit most from the tax deduction and what is in the best interest of the children.

If that were to be the case, I would have the deduction no problem. But is it worth the risk? Waiting for the attorney to call me back now and see what they say...will be an interesting call.

Thanks for your info!

It sounds to me that you can claim the exemptions per your decree even with the condition placed with regards to him being current. Even so, your decree is "conditional" and in the eyes of the IRS the CP can claim the exemption unless they signed a Form 8332.

It sounds as if you are perfectly within your rights to claim your child (with Federal Court and the custody agreement in your favor).

 

[cc423]

I'm not so worried about IRS as I am the CP and everything I am reading and everyone I talk to says take the deduction. My bigger concern is will I be held in contempt with my county court, and if so whats the worst that could happen?

Taking the exemption on his taxes wont change his return due to his low income, only if he lies and tries to get EIC (but then he's stupid).

Of all the times he was in contempt during our divorce the Court did nothing. The problem being compounded by living in a small town and one attorney doesn't want to clean up another attorneys mess, or step on toes.

At this point I'm about ready to file and hope for the best.

 

[tmsinWA]

Good Luck!

From my understanding of your situation...your decree states that you can claim exemptions until which time your ex becomes current in his support. He's not current, therefore you should not be in contempt.

I wouldn't worry too much about a possible contempt charge in family court. Since you are the CP, he hasn't paid support, and you have the higher income....I doubt any judge would rule against your decision. More than likely, his butt would be nailed to the wall with regards to arreage and back support. Besides, he would have to bring the issue back into court to fight it.....and it doesn't sound like he has the funds to do that...

I wouldn't worry about it....file the exemption and forget about it!

 

[LdiJ]

What is the name of your state? Ohio
I've found myself with a bit of an issue for 2004 taxes. I am the Custodial Parent, my ex only has visitation.
My divorce decree was poorly written in 2001 when it came to the tax issues.
It states that my ex can take our youngest child and I would take the older child, when/if he became current in child support. It was to remain that way until our oldest reached 18, then we would alternate yearly after that with me taking even tax years, him taking odd tax years. However, they left off the wording regarding when our oldest turned 18, and of course he's going to be a jerk.

Since he had been seriously delinquent in child support it hadn't been an issue until this year when the he finally caught up at the end of September.
He's informed me that he's taking the deduction for our youngest even though he only has an income of $7200.00. Since the child lived with me the entire year he can't claim EIC.
At our last child support review he showed an income of $7200.00 or less for every year since 2001 and did not have his taxes from 01-03 filed yet. Now he says they have been filed, and he owes some money from 01, and thats why he needs the deduction(?). I've tried to explain to him that at that low of income, taking the deduction will not change his refund. Either way he'll get all his tax $$ back.

He also cashed out a small 401k that was awarded to me in the divorce.
I alone am funding our older childs college education, and am taking the deductions for that and I have also remarried. Without the deduction of my younger child, it will also hurt on the FAFSA application.

I'm finding the current articles regarding the Use/Non-Use of Dependency Exemption rather confusing. It seems like IRS flat out gives the exemption to the Custodial Parent regardless of divorce decree (i have not signed any 8332) but on the other hand am I going to get smacked from the courts if I take the deduction? What could they do since he would have had no benefit anyway? During divorce proceedings, my ex liquidated 2 cars, a boat and most of a business while there was an order in place not to do so and the courts didn't do anything.

I realize a trip back to court to straighten this out is going to have to happen, but is the judge likely to change the original order and do I have ANY chance of getting the deduction for 2004? Should I file or wait? So far this has been the divorce from hell.
Thank you & sorry for the lengthy post.

You are correct. Your ex gets absolutely no benefit from the exemption. Go ahead and claim the child yourself. You will prevail with the IRS and your ex can't even find you in contempt because you ex gets no actual benefit. You may have to file a paper return if your ex filed first.

 

[cc423]

Oh thanks so much...I wondered how that would play out if he had filed already. I assume if I try and file electronicly, and he has already filed, it will just reject the filing?

By the way....in response to the post 2 back..he IS now current in support. The issue being him not getting any benefit from taking the deduction and doing it just to cost me $$.

The fact that he claims to make only $7500.00 and less every year is his trick for paying as little child support as possible. During our 15 year marriage, he made between $50,000. - $105,000.00.

However unless I can go into CS hearing with proof that he's working under the table, there's nothing I can do. At our last hearing he provided unfiled tax returns and no W-2.
Its been nothing but a nightmare.
I guess in the end all of this just validates my reason for the divorce in the first place, right?

 

[LdiJ]

Oh thanks so much...I wondered how that would play out if he had filed already. I assume if I try and file electronicly, and he has already filed, it will just reject the filing?

By the way....in response to the post 2 back..he IS now current in support. The issue being him not getting any benefit from taking the deduction and doing it just to cost me $$.

The fact that he claims to make only $7500.00 and less every year is his trick for paying as little child support as possible. During our 15 year marriage, he made between $50,000. - $105,000.00.

However unless I can go into CS hearing with proof that he's working under the table, there's nothing I can do. At our last hearing he provided unfiled tax returns and no W-2.
Its been nothing but a nightmare.
I guess in the end all of this just validates my reason for the divorce in the first place, right?

If he has already filed then you would not be able to file electronically (it would get rejected) but you are perfectly free to file a paper return and you would get your refund.

If he files contempt of court against you, (assuming that he can even do that) then you would simply demonstrate to the judge that he recieved no value from claiming her as a dependent, therefore he was not damaged. Now if he lies and claims EIC....he is going to get in BIG trouble with the IRS.

 

[cc423]

I spoke to 2 separate attorneys today. Both telling me to file for Motification. However, they don't know if a hearing date could be set before April 15.
The first attorney said she could get me the deduction for every other year. The second attorney said he was pretty confident I could get the deduction for every year based on the fact that my ex gets no benefit from the deduction. However, he couldn't take my case.

This is such a mess. Basicly its going to cost at least $1000.00 just to retain the attorney and get this thing heard, and thats if my ex doesn't try to pull any crap.

My original attorney who drew up my divorce decree was supposed to get a QDRO to put the ex's 401k in my name. She never did. Now he's cashed out the 401k, had half of the check sent to IRS to cover back taxes, and sent the rest to me. Nice try, I'm not cashing it. The check is from Schwab, and until its cashed, he cant get his 1099-R.

So, since he's in contempt for cashing out the 401k, do I chance taking the deduction and also being in contempt? As the first attorney said, 2 contempts dont make a right....however, I just cant stand the thought of being screwed over even one more time.